This significant article shows a potential new source of support for winning Single-Payer healthcare: organized labor. Unions which had held back from embracing Single-Payer because they had their own health plans are now realizing that Obamacare does not just encourage employers to cut back full-time jobs to un-benefited part-time jobs. Obamacare also damages hard-won union-based health plans.

President Obama has had his hands full fending off Republican assaults against Obamacare. Sen. Ted Cruz of Texas and a handful of other GOP lawmakers even favor shutting down the government, if necessary, to prevent the new law from fully taking effect.

But Obama is also getting blasted these days from an unexpected quarter: Major labor groups instrumental in helping the president win a critical second term are charging that Obamacare is undercutting existing union-sponsored health insurance programs and even encouraging employers to cut workers’ hours.

This is the latest bizarre wrinkle in the unfolding political drama over Obama’s signature program for extending health insurance coverage to millions of uninsured Americans.

Last month, leaders of three of the largest labor unions sent a scathing letter to Senate Majority Leader Harry Reid (D-NV) and House Minority Leader Nancy Pelosi (D-CA), warning that if the problems with the insurance program are not addressed, the new health care law will “shatter not only our hard-earned health benefits, but destroy the foundation of the 40-hour work week that is the backbone of the American middle class.”

The letter was written by James Hoffa, president of the International Brotherhood of Teamsters, Joseph Hansen, president of the United Food and Commercial Workers International Union, and Donald Taylor, president of UNITE-HERE, a union that represents hotel, airport and food service workers. It stressed the unions’ displeasure with a law they all had previously supported and helped to pass.

“When you and the president sought our support for the Affordable Care Act, you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat,” said the letter. “We have been strong supporters of you. In campaign after campaign we have put boots on the ground, gone door-to-door to get out the vote, run phone banks and raised money to secure this vision. Now this vision has come back to haunt us.”

AFL-CIO president Richard Trumka echoed those concerns Thursday, telling reporters during a breakfast event that the administration and Congress made some serious blunders in drafting the legislation that must be fixed to quiet the growing union discontent.

“We’ve been working with the administration to find solutions to what I think are inad-vertent holes in the act,” said Trumka. “When the act was put together, it wasn’t thought completely through. So we work on a daily basis. I’m hopeful we get something done in the very near future.”

PERVERSE INCENTIVE?

From labor’s perspective, arguably the biggest problem is that the law – when fully implemented – will create an incentive for employers to keep their workers’ hours below 30 hours a week.

The Affordable Care Act will eventually penalize firms employing 50 or more people that don’t offer health insurance – or that offer coverage below minimum standards. This is the so-called “employer mandate.” The White House this summer put that provision on hold until 2015 to give medium and large employers the opportunity to better prepare and plan for the changes and reporting requirements. But once that provision finally takes hold, union leaders say that companies will cut the hours of workers below 30 hours per week to get under the 50-worker threshold for providing health care coverage.

With salaries remaining relatively static during this tepid economic recovery, a cutback in hours would be tantamount to a substantial pay cut for many union and other workers who are struggling to make ends meet.

“Employers are trying to plan their future by creating a work force that gets 29-and-a-half hours or less a week, so that they don’t have to pay health care,” Trumka said yesterday. “That is obviously something that no one intended….Is that an issue? Yeah, that’s an issue.”

Labor leaders also fear that Obamacare may end up “destroying” the union’s multi-employer health plans unless it is changed.

At issue are “Taft-Hartley plans” – the non-profit health care plans long used by union-ized workers in the building trades and service industries and jointly administered by participating companies and unions. Those plans have traditionally allowed workers in transient industries to move between employers while still preserving the same quality of health care. Because union leaders have helped negotiate those plans, they typically offer strong coverage at a low out-of-pocket cost to workers.

Under the Affordable Care Act as currently interpreted by the administration, union members with this form of health insurance coverage would not be entitled to federal tax subsidies available to others who purchase policies from private companies in the new insurance exchange, according to labor leaders. Moreover, many union members who hold these “non-profit” policies may get hit with federal taxes to help offset the cost of the subsidies offered in the new state exchanges.

“Taken together, these restrictions will make non-profit plans like ours unsustainable, and will undermine the health-care market of viable alternatives to the big health insurance companies,” according to the letter sent to Reid and Pelosi by the labor chiefs.

The Treasury Department has signaled it views the Taft-Hartley plans as equivalent to other employer-based plans, which aren’t eligible for subsidies. And the Congressional Research Service, a nonprofit legislative analysis group, published a paper saying Taft-Hartley plans likely wouldn’t be eligible for subsidies based on the way the law is written.

The health care law is likely to be a prime topic of conversation when Obama addresses the AFL-CIO’s Quadrennial Convention next month in Los Angeles. Obama’s relations with labor have been rocky at times, for sure. Yet while he’ll talk about his plans to create jobs, provide better pay and strengthen workplace protections, the president’s speech on Sept. 9 may not include every reassuring word that labor leaders are right now longing to hear.

Protestors march as they carry a banner reading, “Public health care” and “24 hours strike” during a demonstration against regional government imposed austerity plans to restructure and part privatize health care sector in Madrid, Spain, Sunday, Jan. 13, 2013. Madrid proposes selling off the management of six of 20 public hospitals and 27 of 268 health centers. Spain’s regions are struggling with a combined debt of 145 billion euro ($190 billion) as the country’s economy contracts into a double dip recession triggered by a 2008 real estate crash. Andres Kudacki / AP Photo

MADRID — Thousands of people marched in Madrid on Sunday to protest plans to privatize parts of their public health care system, with some questioning the motives behind the government’s actions.

The march by employees and users of the system is the year’s second large “white tide” demonstration, named after the color of the medical scrubs many protesters wear. Several similar marches took place last year.

Demonstrators thronged main boulevards in the center of the Spanish capital, carrying banners saying, “Public health care should be defended, not sold off.”

The Madrid region has proposed selling the management of six of 20 large public hospitals in its jurisdiction and 10 percent of its 268 public health centers. It says these reforms are needed to secure health services during Spain’s economic crisis.

A protestor carries a banner reading, “Spanish Prime Minister Mariano Rajoy, serial fraudster” during a demonstration against regional government imposed austerity plans to restructure and part privatize health care sector in Madrid, Spain, Sunday, Jan. 13, 2013. Madrid proposes selling off the management of six of 20 public hospitals and 27 of 268 health centers. Spain’s regions are struggling with a combined debt of 145 billion euro ($190 billion) as the country’s economy contracts into a double dip recession triggered by a 2008 real estate crash. Andres Kudacki / AP Photo

But protesters were skeptical.

“This measure is politically inspired and not financial,” said mechanical engineer Mario Sola, 47. “If public hospitals were unsustainably loss-making as we’re being told, private enterprise wouldn’t be interested.”

Health care and education are administered by Spain’s 17 semi-autonomous regions rather than by the central government.

Many regions are struggling financially as Spain’s economy has shrunk due to a double-dip recession following the 2008 implosion of the once-prosperous real estate and construction sectors.

Some regions overspent during boom years, but are now excluded from borrowing on the financial markets to repay their accumulated debts, forcing them to seek savings and even request rescue aid from the central government.

Regional health councilor Javier Fernandez-Lasquetty called the protests irresponsible and said that “everyone has their point of view, but we are all fighting to defend the same thing.”

Jose Gabriel Gonzalez Martin, president of Spain’s Independent Civil Service Trade Union Center, said many people’s suspicions were aroused when former government health officials acquired jobs with private companies lining up to take over medical analysis functions.

“It might be purely coincidental, but some coincidences are surprising,” Gonzalez said.

Protestors shout slogans during a demonstration against regional government imposed austerity plans to restructure and part privatize health care sector in Madrid, Spain, Sunday, Jan. 13, 2013. Madrid proposes selling off the management of six of 20 public hospitals and 27 of 268 health centers. Spain’s regions are struggling with a combined debt of 145 billion euro ($190 billion) as the country’s economy contracts into a double dip recession triggered by a 2008 real estate crash. Andres Kudacki / AP Photo

“Doctors, hospitals and federal regulators are struggling to cope with an unprecedented surge in drug shortages in the United States that is endangering cancer patients, heart attack victims, accident survivors and a host of other ill people.” … The causes vary from drug to drug, but experts cite a confluence of factors: Consolidation in the pharmaceutical industry has left only a few manufacturers for many older, less profitable products, meaning that when raw material runs short, equipment breaks down or government regulators crack down, the snags can quickly spiral into shortages.”

This is a perfect illustration of why the research, development, ownership and production of medicines must not be left in the hands of private businesses. Drugs must be researched and produced according to our needs, not profit opportunities. Private companies must not be allowed to own patents on drugs. Despite spectacular advances in research techniques, companies’ profit-driven research has produced few significant advances. It is virtually impossible to oversee private manufacture of medicines, and companies regard fines in response to tragic “accidents” as a cost of doing business.

Doctors, hospitals and federal regulators are struggling to cope with an unprecedented surge in drug shortages in the United States that is endangering cancer patients, heart attack victims, accident survivors and a host of other ill people.

A record 211 medications became scarce in 2010 — triple the number in 2006 — and at least 89 new shortages have been recorded through the end of March, putting the nation on track for far more scarcities.

The paucities are forcing some medical centers to ration drugs — including one urgently needed by leukemia patients — postpone surgeries and other care, and scramble for substitutes, often resorting to alternatives that may be less effective, have more side effects and boost the risk for overdoses and other sometimes-fatal errors.

The causes vary from drug to drug, but experts cite a confluence of factors: Consolidation in the pharmaceutical industry has left only a few manufacturers for many older, less profitable products, meaning that when raw material runs short, equipment breaks down or government regulators crack down, the snags can quickly spiral into shortages.

“It seems like there were a lot of things happening with consolidations and quality issues and more things coming from overseas,” said Allen J. Vaida, executive director of the Institute for Safe Medicine Practices, a nonprofit group that helped organize a conference last fall to examine the issue. “It just reached a point where the number of shortages was slowly going up and up, and now we have a national crisis with this huge shortage of critical medications.”

No one is systematically tracking the toll of the shortages, but reports are emerging of delayed treatments, anxious searches for desperately needed drugs, devastating injuries from mistakes and less-adequate drugs, and even possible deaths.

Federal regulators have been rushing to alleviate the shortages, sometimes helping firms resume production more quickly or approving emergency imports of supplies from overseas.

The Food and Drug Administration eased a shortage of the anesthetic propofol last year by allowing foreign importation, for example, and this year approved bringing in several other medications, including two cancer drugs.

“The types of products we’re seeing shortages of are really concerning,” said Valerie Jensen, who heads the FDA’s Drug Shortages Program. “This is affecting oncology drugs, critical-care drugs, emergency medicine drugs. We’re doing everything we can under our current authority to try to deal with this situation.”

In Congress, legislation has been introduced to address the problem. For example, a bill would require companies to notify the FDA in advance about anything that might cause a shortage and give the agency new powers to try to assuage them.

“We can’t put patients’ lives at risk simply because there’s some snafus in a process or a manufacturer decides it’s less profitable to make a certain drug,” said Sen. Amy Klobuchar (D-Minn.). “Patients deserve better than that.”

‘Very global supply chain’

Many of the shortages involve older, cheaper generic medications that are less profitable, causing many firms to stop producing them and leaving fewer sources. Most involve “sterile injectable” medications that are more complicated to produce and therefore are more prone to manufacturing problems.

In addition, drug companies increasingly rely on raw materials from other countries.

“We’ve certainly reached a very global supply chain for drug products, with the active ingredients typically made outside of the United States,” said Gordon Johnston, vice president for regulatory sciences at the Generic Pharmaceutical Association. “It could be Europe, India — some cases China. If there’s a problem at a facility in Italy or India, it leads to disruption of the drug supply in the United States.”

Some industry representatives blame part of the problem on increased oversight by the FDA, which has made drug safety a higher priority after coming under intense criticism for being too lax.

“As you know right now, FDA has taken a heightened approach towards drug safety,” said Maya Bermingham, senior assistant general counsel at the Pharmaceutical Research and Manufacturers of America. “FDA has stepped up inspections. The more you look, the more you may discover problems.”

While acknowledging that the industry needs to do a better job of coordination, some company officials said the agency should coordinate enforcement actions and drug shortage issues more closely to avoid administrative requirements that cause interruptions.

“We’re not sure how much of that is going on recently because we’ve seen more and more shortages in the industry. We think that maybe some of those coordination issues can be worked on,” said Joshua Gordon, vice president and general manager of specialty pharmaceuticals at Hospira, the largest producer of specialty generic sterile injectables.

Shortages of pre-loaded epinephrine syringes and propofol, for example, occurred when suppliers dropped out just as the FDA was demanding additional documentation, he said.

“They are very focused on taking quick and and aggressive action,” Gordon said. “We applaud the agency’s role in assuring quality, but it can slow things down significantly.”

FDA officials dispute that greater government oversight is a major factor, saying manufacturing problems were the cause of most shortages.

“There has not been a significant increase in domestic enforcement actions (seizure or injunction) for this class of products in recent years,” Jensen wrote in an e-mail.

‘Too many . . . will die’

Whatever the causes, many of the affected drugs are mainstays of medical care, such as the potent painkiller morphine, norepinephrine, which is commonly used in emergency rooms, and electrolytes, which are often given to patients in intensive care.

But shortages have been reported in many categories of drugs, including antibiotics, and drugs central to the treatment of many cancers, forcing oncologists to delay or alter carefully timed chemotherapy regimens.

“We have heard some horror stories where patients are really begging to get the drugs from other sources and where practices or institutions are forced to kind of triage patients and save the drugs for those — quote — most curable, where they have the best prognosis and using substitutes where there isn’t a cure possibility,” Michael Link, president-elect of the American Society of Clinical Oncology.

The drug cytarabine has caused the most concern and gotten the most attention because it is highly effective for treating several forms of leukemia and lymphoma but must be administered as quickly as possible, especially to patients with acute myeloid leukemia.

“With this drug they can be cured and without this drug too many of them will certainly die. That’s the simplest way to put it,” said Deborah Banker, vice president for research communication at the Leukemia & Lymphoma Society. “The disease progresses so rapidly that untreated patients can sadly die within days. There is no time for delay and no certainty of a good outcome if you can’t get a full dose.”

Many hospitals are running low, and some have run out completely. That has required many facilities to ration the drug, giving priority to those who need it most urgently.

“It’s so unbelievable,” said Mary Collins, 57, of La Crosse, Wis., whose husband, Michael, 66, had problems obtaining cytarabine to fight lymphoma. “A cancer diagnosis is a long, very, very stressful circumstance. And then to learn that a particular drug is no longer available to you and that there seems to be no formalized mechanism in place to correct it just makes it worse.”

Cytarabine’s scarcity was caused by hitches that two out of the three manufacturers hit in obtaining raw materials, as well as the discovery of crystals in some shipments.

The third manufacturer was unable to make up for the shortfall. Some of the problems have been resolved, however, and the FDA is working on importing the drug.

The shortages are forcing hospital pharmacists to juggle supplies and hunt for new sources. Many hospitals, including several contacted in the Washington area, say they are usually able to patch together solutions.

But some resort to paying inflated prices or buying from unfamiliar suppliers, increasing the risk they may be getting counterfeits.

“When it becomes clear that some drug may be in short supply or going into a shortage, what happens is sometimes there are unsavory folks — small distributors — who buy up whatever is left and sell it back at exorbitant prices,” said Roslyne Shulman, director of policy development for the American Hospital Association.

‘Panic in the pharmacy’

When shortages occur, physicians turn to less optimal alternatives or find out too late that the drug they need is unavailable. Mark Warner, president of the American Society of Anesthesiologists, described two calamities that occurred in the past year because of shortages. In one, a 16-year-old boy suffered brain damage because doctors did not have one muscle relaxer needed to treat a complication from jaw surgery.

In another, a middle-aged woman was left in a permanent vegetative state because doctors did not have the drug epinephrine after she experienced complications from heart surgery.

“These are tragic cases,” Warner said. “It’s one of those things most anesthesiologists in the country think about when they are driving to work every day. We don’t know where the shortages are and they come on very quickly. ”

Nurses and doctors responding to emergencies, meanwhile, are losing precious minutes when they must work with unfamiliar substitutes or recalculate dosages, increasing the chances of overdosing or under-dosing patients. One of the biggest problems is a shortage of syringes pre-filled with precisely measured doses.

“Grabbing the right medication out of a crash cart that’s already in a syringe is a big advantage over having to get out the syringe, get out the needle, get the medication and get the measurement right,” said Angela Gardner, an emergency medicine physician at the University of Texas Southwestern Medical Center in Dallas and immediate past president of the American College of Emergency Physicians. “Those minutes are lives.”

Many hospitals are recalibrating electronic medication delivery systems or preparing the correct doses ahead of time, especially for the emergency room, to minimize mistakes.

“We’ve been extremely fortunate using strategies in cooperation with our medical staff,” said Jay Barbaccia, head pharmacist at the Washington Hospital Center. “We’ve had a lot of panic and inconvenience but minimal, if any, impact on our ability to provide care. It makes my life miserable — the panic is in the pharmacy when we’re scrambling around to find alternatives.”

At least two patients reportedly died from overdoses of hydromorphone they received because of a morphine shortage.

At least 19 patients were sickened and nine died in Alabama this year after being infused with a solution through their feeding tubes that was apparently contaminated with bacteria by a pharmacy using an unfamiliar ingredient because of a shortage.

The shortage occurred because the manufacturer had trouble getting the product’s packaging.

“It’s horrible. It’s something that shouldn’t have happened,” said Donald J. Mottern of Alabaster, Ala., whose 71-year-old mother was one of the victims. “We lost the matriarch of our family. The loss to our family has left each of us very hollow.”

Obama’s Health Plan is fatally flawed because it uses insurance companies to deliver healthcare, but the Health Plan also directly threatens Medicare.

People talk about “the healthcare crisis,” but actually there are two healthcare crises.

For us, the healthcare crisis is 51 million uninsured, stripping workers’ health plans, unaffordable health insurance that denies claims and charges high co-pays and deductibles, medical bankruptcies, a tattered safety net, dangerous mistakes in hospitals, and some of the worst health indicators in the industrialized word.

For corporations, the healthcare crisis is the high cost of healthcare premiums for employers, raising the price of US goods so they can’t compete in the world market.

As the debate over healthcare reform developed, media attention shifted from our healthcare crisis to the corporate healthcare crisis. Obama certainly talks about the healthcare crisis from the corporate perspective, and we can see the Obama health plan reduces healthcare costs for government and business, but does not reduce costs for workers and their families.

In fact, the Obama health plan introduces huge increases in costs, by guaranteeing trillions of dollars in profits for health corporations, particularly insurance and drug companies. If the Obama health plan was structured to guarantee huge profits for health corporations, where is the cost containment supposed to come from? Whose costs will get reduced?

Medicare is where costs will be reduced. In fact, more than half the cost of the entire Obama health plan comes from scaling back increases in Medicare spending over the next ten years. The entire Obama health plan will cost about $1 trillion over the next 10 years, and $575 billion[1] will come from scaling back future Medicare increases that are needed to balance out inflation and to care for the baby boomers, who start getting Medicare in 2011.

How big a cut is this $575 billion? Total Medicare spending for 2010 to 2019 was expected to exceed $7 trillion[2], so this $575 billion reduction is up to an 8% cut, applied over the same period that 35 million baby-boomers will enter Medicare. Put differently, for the past 20 years Medicare spending grew 8%[3] per year. The Obama Plan will clamp down Medicare cost growth to 6%[4] per year. It’s not fair: Medicare and its patients would have to reduce their healthcare enough to achieve overall cost savings, even though monumental waste has just been cemented in place.

What’s insidious about this plan is that most of these Medicare cuts will NOT be felt by Medicare patients as direct cost increases or healthcare restrictions. Instead, the Medicare cuts will be to providers of Medicare treatment: the doctors, and hospitals, and home care agencies, rehabilitation facilities, and even durable medical equipment suppliers. These cuts will reduce providers’ incentive to treat Medicare patients, until the providers finally stop taking them. Like today’s Medicaid patients, Medicare patients will have problems finding someone to care for them.

The figure of $575 billion scaling back of Medicare spending increases from 2010-2019 was calculated by Medicare’s own Actuary, and is considered a better estimate than Congressional Budget Office figures because the Actuary’s calculations give a more complete picture.[5] Accordingly, all the following estimates of cuts from various parts of the Obama Health Plan come from the Medicare Actuary’s April 22 report “Estimated Financial Effects of the “Patient Protection and Affordable Care Act as Amended”[6]

Some highlights of the reductions:

$145 billion in payment cuts to private Medicare Advantage plans, scaling their payments back to the level of traditional Medicare.

$233 billion cuts in direct payments to the providers of Medicare hospital and outpatient care, plus penalties for their expected failure to meet “productivity” goals.

Cuts in payments to “inefficient” hospitals, mostly in low-income, medically-underserved areas, often large teaching hospitals serving the poor and uninsured.

$24 billion in cuts ordered by the Independent Payment Advisory Board, a new, independent, high-power, cost-containment commission built into the Obama Plan.

Payment reforms: putting Medicare doctors under Managed Care.

Let’s look at these cuts in more detail:

$145 billion in payment cuts to private Medicare Advantage plans, scaling their payments back to the level of traditional Medicare.[7]

In 2012[8], Medicare will begin reducing payments to the privately-operated Medicare Advantage Plans. This will take 3-7 years, depending on how much reduction is needed to bring an individual plan’s payment down to traditional Medicare levels. This is the Medicare cut most people have heard about. Obama has tried to get us to support the Medicare cuts by conjuring up images of him slashing the bloated payments to greedy private insurance companies administering Medicare Advantage plans. (While off-camera he gives private insurers tens of millions of new customers in 2014!)

Medicare Advantage never should have happened. Traditional Medicare was developed in the mid-1960s. Since that time there have been significant developments in medicine such as pharmaceuticals, an increased ability to treat illness on an outpatient basis, and technical advances such as medical imaging, endoscopic surgery, and prostheses. Also, since the mid-1960s, there has been a new attention to diseases of older people, such as chronic disease or mental problems. The potential of these advances has unquestionably been marred by market forces, yet, on balance, they are advances.

These advances should have been incorporated into the government’s basic Medicare plan, allowing Medicare to advance in step with medical science. Instead, corporate forces have blocked Medicare’s evolution, and many of the last 45 years of medical advances are only available to Medicare patients through private corporations. Medicare patients’ two choices are either (1) private Medigap insurance policies, which Medicare patients buy themselves to add benefits on top of their traditional Medicare benefits or pay for their traditional Medicare’s patient charges, or (2) private Medicare Advantage plans, which contract with Medicare to provide all Medicare services, and are paid for mostly by government payments to the corporations running the plans, and partly by patients buying into the plan.[9]

The government and Medicare didn’t intend to subsidize these private Medicare Advantage plans. In 1997, HMOs and their lobbyists originally promoted these plans promising that these private corporations could provide traditional Medicare services plus modern medical advances and make a profit. Almost 5 million seniors enrolled in these plans. But the HMOs found they could not make enough profits to satisfy investors, and they started withdrawing their plans. By 2003, 2.4 million patients had been dropped. [10] Rather than responding to this crisis by adding modern medical advances to basic Medicare, the government caved in to corporate pressure, and increased its payments to Medicare Advantage plans, saying their purpose was no longer saving money but expanding benefits to consumers through the magic of private plans. With this magic, of course, also comes difficulties reaching doctors, misinformation on benefits, restrictions and denials of care, changes in benefits, and unwillingness to care for seriously sick patients.[11] Nevertheless, payments to Medicare Advantage plans have been roughly 114% of payments for comparable patients in traditional Medicare.[12]

It is this government subsidy to private plans which the Obama Health Plan eliminates. The Obama administration is OK with letting Medicare patients bear the extra cost of buying private Medigap policies for complete and modern healthcare. This explains why AARP, which sells Medigap policies, did not oppose the Obama Plan. And the Obama administration is OK with letting patients with just traditional Medicare pay out-of-pocket for additional services. But the Obama administration does NOT want the government to even partly subsidize the additional benefits of some Medicare Advantage plans. Once again, the Obama health plan lowers costs for government, but raises costs for beneficiaries.

The payments cuts to Medicare Advantage plans are expected to lead to huge premium increases, benefit cuts, or outright cancellation of programs, which would decrease Medicare Advantage enrollment by 50%[13]. Before we gloat, remember, private insurers might lose up to 5 million Medicare Advantage customers, but they’ll be gaining at least four times that number in 2014 when “universal coverage” kicks in. But the millions on Medicare Advantage patients who are forced back onto traditional Medicare will be stuck with higher out-of-pocket costs or forced to buy private Medigap policies.

To be sure, people’s feelings do differ about the government’s cutting back on payments to private Medicare Advantage plans, but the important thing to remember is that these cuts to Medicare Advantage plans are only ¼ of the total Medicare cuts. What are the rest of the cuts, and how will they affect Medicare beneficiaries?

$233 billion cut in direct payments to the providers of Medicare hospital and outpatient care, plus penalties for their expected failure to meet “productivity” goals. This will lead to a shortage of Medicare providers.[14]

The first kind of cut is a scaling-back of the yearly payment increases these providers get to compensate for their increased costs in providing care to Medicare patients. Actually, these payment increases have never kept up with inflation of medical costs. The yearly payment increases have ranged from 2.0-3.5%[15] over the last decade, but medical care costs in general have increased about 6% annually. In spite of this, the Obama plan will deduct a significant fraction[16] of each year’s payment increase, and the deduction gets worse as time goes on. Medicare providers will have less and less incentive to treat Medicare patients.

The second kind of cut is a one-time penalty which will be deducted from federal payments to providers if these providers cannot increase their “productivity” as fast as the rest of the nation’s economy. CMS, the Centers for Medicare & Medicaid Services, knows it will be virtually impossible for providers to meet this “productivity” target, and its Actuary has already included these deductions as cuts in Medicare payments to providers.[17] One financial adviser to hospital systems wrote “Within the next 6-12 months, healthcare organizations will need to find a way to reduce their expenses or increase revenue by 3-5% to offset Medicare productivity adjustments.” [18]

The combination of the across-the-board reductions and the penalties for not meeting productivity targets means many providers will experience absolute decreases in funding from one year to the next.[19]

Medicare’s own Actuary estimates these two types of payment reductions could cause 15 percent of hospitals and other institutions to become unprofitable and stop providing Medicare services by 2019. By 2030 it would be 25 percent of hospitals[20]. According to Richard Foster’s April 23, 2010 report “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibility jeopardizing access to care for beneficiaries). Simulations by the Office of the Actuary suggest that roughly 15 percent of Part A (inpatient) providers would become unprofitable within the ten year projection period (2010-2019) as a result of the productivity adjustments.”[21]

The Disproportionate Share Hospital (DSH) program provides special funding to hospitals in recognition of their higher costs in treating low-income patients. Starting in 2014, Medicare “DSH” payments to these hospitals will get big cuts.

The Medicare “DSH” payments to individual hospitals were started in 1986 to reflect the higher cost of treating Medicare patients in poor areas where Medicare patients are sicker. Over time, the rationale for Medicare DSH payments was expanded to assure hospital access for all poor and uninsured patients, and payments were based on individual hospital’s days of care for poor Medicare and Medicaid patients. In March of 2007, Medicare’s advisory board MedPAC estimated that 75% of DSH payments were not “empirically justified.”[23]

Beginning in 2014, hospitals receiving Medicare DSH funds will be assured of receiving only 25% of their normally-calculated DSH funds.

The remaining 75% of normally-calculated DSH funds have a percentage cut each year equal to that year’s percentage drop in uninsured population compared to 2013, plus an additional percentage which increases every year from 2014 to 2019. [24] The result is that the hospital’s DSH funds are cut faster than its drop in uninsured patients.

After 2019 DSH funds would be distributed to hospitals based on each hospital’s level of uncompensated care compared to total uncompensated care for all hospitals.

The CMS Actuary estimates these cuts be $50 billion from 2014 to 2019. [25]

Cuts in payments to “inefficient” hospitals, mostly in low-income, medically-underserved areas, often large teaching hospitals serving the poor and uninsured.

Obama’s speeches on his health plan have tried to reassure older people that the Medicare cuts would be benign because they would be restricted to (1) cutting the bloated payments to greedy Medicare Advantage companies, and (2) improving efficiency in the Medicare system. The concept of efficiency has come to the forefront in the discussion of healthcare financing. How has this happened?

For two decades, the Dartmouth Institute for Health Policy and Clinical Practice has studied Medicare hospital costs and published its results in the Dartmouth Atlas[26]. The Atlas shows big geographic differences in how much is spent, and purports to demonstrate that the high-spending hospitals don’t have better medical outcomes, and sometimes have worse outcomes.

This has all been put together into wild claims by health policy researchers and Obama officials that 30%[27] of medical spending is waste and could be cut without affecting quality of care. Donald Berwick, Obama’s appointee to direct the Centers for Medicare & Medicaid Services, CMS, which administers Medicare and Medicaid, says 50%[28] of medical spending is waste and could be eliminated without affecting quality of care.

A cottage industry of motivational speakers has sprung up, urging seniors to empower themselves and assert their rights to refuse complex medical treatment. For example, pathologist Dr. George Lundberg spoke at San Francisco’s Commonwealth Club in July. He waved his arms and practically shouted to seniors in the audience “Forget those heart by-pass operations! You don’t need them!” He said the same thing about CAT scans and mammography and even advised women not to examine their breasts. After his talk, he praised the Dartmouth Atlas to the sky, and sold autographed copies of his book Severed Trust, Why American Medicine Hasn’t Been Fixed, which advocates limiting access to the healthcare system.[29] Dr. Lundberg is currently editor of the online journal Medscape and was editor of the Journal of the American Medical Association.

Not surprisingly, Dartmouth Atlas director Elliot Fisher is a consultant[30] for the Peter G. Peterson Foundation, which has spent years trying to gut Social Security, Medicare, and Medicaid. Nor is it surprising that insurance companies help finance[31] the Dartmouth Atlas.[32]

One glaring problem with the Dartmouth Atlas studies is that they only look at patients who died 6-24 months after their hospital admission. So patients whose costly care improved their health and saved them from dying are excluded from the study. This biases the results to say that more spending does not improve outcomes. Other studies which include survivors say the opposite: that more costly care can improve outcomes. A December 23, 2009 NY Times article[33] focused on a comparison of hospitals treating heart failure, which included survivors. The UCLA hospital, often cited as high-cost by the Dartmouth Atlas, had 1/3 fewer deaths from heart failure.

The other glaring problem is that the high-spending poor-outcome “inefficient” hospitals cited by the Dartmouth Atlas are in urban or rural areas with high poverty, unhealthy living and working conditions, poor access to medical care, and a shortage of primary care providers. The result is that patients are already in poorer health when they go into Medicare, and need more treatment, and more expensive treatment. Inadequacies in primary care in these areas means Medicare patients are sicker when admitted to hospitals. These patients also have fewer resources for good after-hospital care, so there are higher rates of re-admission. So of course these hospitals’ Medicare costs are higher and their medical outcomes are worse than the “efficient” hospitals in upper-middle class white areas.

In addition, the large, high-cost, “inefficient” hospitals are usually in big cities where salaries are higher, so all healthcare is more expensive. These hospitals are also often teaching hospitals, which have added expenses that are routinely (and legally) charged to Medicare.

The Dartmouth Atlas people, and their supporters in the Obama Administration, claim that they’ve factored these differences in, but other knowledgeable health policy people say this isn’t the case. A June 2, 2010 NY Times article[34] focuses on these issues.

The Dartmouth mania ties into Medicare cost reductions because in future years the Obama plan will decrease payments to “inefficient” hospitals with higher costs and/or worse outcomes. In 2012, incentive payments will go to hospitals with good quality-of-care data for heart attack, heart failure, pneumonia, surgeries, and healthcare-acquired infections. In 2013, incentive payments would also reward hospitals with low spending per Medicare patient[35]. These quality-of-care provisions of the Obama Plan must be “budget neutral,” so other hospitals’ payments will be reduced to pay for the incentive payments. There will also be penalties that will especially hit hospitals with sicker or poorer patients, and hospitals with tighter budgets. There will be $8.2 billion in penalties for hospitals with higher readmissions[36] and $3.2 billion in penalties for hospitals with higher rates of hospital-acquired infections.[37]

The “efficiency” and “quality” rewards and punishments are the medical equivalent of the “No Child Left Behind” program, which lowers school funding overall, and closes low-performing schools in areas of poverty, non-English-speaking populations, and chronically underfunded education.

$24 billion in cuts ordered by the Independent Payment Advisory Board, a new, independent, high-power, cost-containment commission built into the Obama Plan.[38]

The Independent Payment Advisory Board (IPAB) is charged with clamping down the growth of average per-person Medicare costs. Its powers are essentially beyond the reach of Congress. The Board’s 15 unelected members are experts in medicine, health policy, health care delivery etc., and are appointed by the President with Senate concurrence. The Board can also recommend measures to cut total national health spending.

Starting in 2013, each year’s growth in average per-person Medicare cost will be compared with a threshold growth, based on a modified Consumer Price Index, or later, the Gross National Product. If, in any year, average per-person Medicare cost growth exceeds that year’s threshold, the Board must recommend legislation to either (1) reduce per-person Medicare spending up to 1.5%, or (2) otherwise limit Medicare cost growth to that year’s threshold, whichever is less. [39] The CMS Actuary estimates these cuts will be $24 billion from 2010 to 2019.[40]

The Board’s cost-cutting recommendations become law unless the House and the Senate each adopt a resolution to block them, by a three-fifths majority. If Congress does reject the proposals, Congress must pass its own solutions yielding equivalent cost reduction within 7 months or Health and Human Services will implement the Board’s recommendation. No judicial review of a Board action is allowed.[41]

Since the Obama Health Plan gives insurance and drug companies such large profits and so little regulation, Medicare beneficiaries’ costs are bound to rise faster than the Consumer Price Index or the Gross Domestic Product, and the Board will have to clamp down on Medicare spending almost every year. Medicare’s own Actuary states that if such a Board had been established 25 years ago, it would have had to act in 21 of those years.[42]

The Board is prohibited from rationing care, increasing taxes, and changing Medicare’s benefits, eligibility or beneficiary cost-sharing, and there is a Consumer Panel that advises the Board to make sure the prohibitions are not broken. So the Board has to reduce payments to providers: physicians, home health, pharmaceutical and medical devices, durable medical equipment, and after 2020, to hospitals.[43] Medicare specialists are very worried.[44]

The Independent Payment Advisory Board is the Medicare cost-cutter of last resort. If any other cost-cutting mechanism fails, the board will make recommendations to make up the difference.

In Medicare Actuary Richard Foster’s April 22, 2010 Report, he wrote “limiting actual Medicare cost growth to a level below medical price inflation alone would represent an exceedingly difficult challenge. Actual Medicare cost growth per beneficiary was below the target level in only 4 of the last 25 years, with 3 of those years immediately following the Balanced Budget Act of 1997; (and) the (negative) impact of the BBA prompted Congress to pass legislation in 1999 and 2000 moderating many of the BBA provisions.”[45] (The 1997 Balanced Budget Act, that ended welfare as we know it, included Medicare cuts even more severe than the Obama Plan, including the Sustainable Growth Rate, SGR, formula for limiting Medicare doctor payments.)

Champion budget hawk Peter Orzag said the IPAB is among the most important of the health reform provisions for “sustaining” Medicare, saying for Congress it represented “the single-biggest yielding of power to an independent entity since the creation of the Federal Reserve.” Orzag called it more than a means of cutting government spending, but also a means of wresting the constitutional responsibility for budgeting away from powerful Congressional committee chairmen.[46]

Payment reforms: putting Medicare doctors under Managed Care

Much attention is being given to “payment methodology” reforms in how Medicare doctors get paid. Almost everyone is familiar with cases of real or hyped abuse of the “fee-for-service” payment system, where doctors are paid for each visit, procedure, or test they order, and so there is a profit incentive to over-treat patients.

But patient abuse also occurs under a capitated payment system, where doctors are paid a fixed amount to cover a patient for a year. Here, there is a profit incentive to under-treat patients or treat them as little as possible, since any treatment cuts into the amount of money the doctor was given to cover the patient. (In fact, the only way to remove incentives to over-treat or under-treat is for doctors to be paid by salary as workers, not business-people.)

Managed Care is a variation of the capitated payment system, where an organization that hires doctors is paid the fixed amount to cover a patient for a year, and the organization maximizes its profits by encouraging the doctors to treat patients as little as possible, through either rewards, penalties, or threats. In the late 1980s and early 1990s, managed care dominated healthcare, which led to large numbers of cases of HMOs denying necessary medical care or providing poor medical care. A major push-back of patients led to patient protection laws and letting up of managed care pressures.

The main thrust of the payment reforms in the Obama plan is to move Medicare doctors away from fee-for-service payment, and instead to work under managed care payment.

One new way to push doctors into managed care is Payment Bundling.In Payment Bundling, doctors, hospitals, nursing homes, and other providers would work together to be jointly accountable for providing care for eight kinds of patient care, such as a hip replacement or cardiac by-pass. For each patient care episode, the group would receive its set fee and divide the money between the doctor, the hospital, the nursing home etc. Hospitals already get a fixed payment for particular episodes of patient care, called the DRG system, but Bundled Payments extend this managed care payment to doctors, since they would get a fixed payment per episode. Payment Bundling is an experimental program beginning in 2013, and Health and Human Services has not chosen what kinds of patient care would use bundled payment.[47]

Another new way to push Medicare doctors into managed care is Accountable Care Organizations (ACOs). ACOs would be groupings of doctors and hospitals who form a legal structure to (1) take responsibility for complete care of at least 5,000 Medicare patients, (2) accept fixed payments from Health and Human Services, and (3) distribute the fixed payments to the providers in the ACO. If, during a 3-year period, an ACO can reduce its average per-person Medicare spending to meet a goal set by Health and Human Services, the ACO can collect an award.[48] If ACOs significantly reduce Medicare costs, planners envisage them managing the healthcare of 40-75% of Medicare patients.[49]

As with any per-capita payment method, the incentive in both Bundled Payments and ACOs is to give less care, since any care given eats into the fixed payment the group receives. If the patient develops an infection, or fails to recover as fast as expected, any extra care given represents a loss in profits.

Many of these new payment reform strategies, like Bundled Payments or ACOs are to be developed by a new Center for Medicare and Medicaid Innovation, CMI, which is to start in 2011.[50] These new payment reform strategies are sketched out in the Obama Health Plan as “pilot projects,” meaning they are yet to be planned out and tested even on a small-scale basis. The term “pilot project´ has a legal meaning: it can be completely planned, expanded, and put into general practice by the Department of Health and Human Services, an arm of the Executive branch, without any oversight by Congress, as long as they don’t increase spending.[51] The Center is expected to develop other programs including care for chronic diseases, remote monitoring of very ill Medicare patients in local hospitals by specialists, moving doctors to salaried positions, and perhaps testing state single payer programs.[52]

Are business and government serious about making these Medicare cuts?

The Obama Health Plan stabilizes and guarantees billions in profits to insurers, drug companies, and hospitals, yet demands that Medicare alone reduce its future expenses enough to control overall health costs, even as 79 million baby boomers are about to enter the system. This is patently unfair. As Brookings Institution’s Henry Aaron told the House Budget Committee in his June 2008 testimony, “Growth of Medicare spending per person has closely tracked growth of per person spending on health care in general. That parallelism simply reflects the central purpose of Medicare and Medicaid: to assure that the elderly, disabled, and poor receive care similar to that available to the general population. … Holding growth of per person spending on Medicare and Medicaid below that for the general population would imply the gradual abandonment of the national commitment to assure the elderly, disabled, and poor standard health care.”[53]

Many critics, both from the left and the right, criticize the Obama plan, saying it cannot control costs. Critics from the left point to the huge profits to healthcare companies. But many other critics are saying the Medicare cuts we’ve outlined will never happen; that as the cuts come due, Congress will reverse them.

As evidence, they point to the limits on Medicare doctor payments that were written into the severe cuts in the 1997 Balanced Budget Act. These laws said Medicare doctor payments could not grow faster than a so-called Sustainable Growth Rate (SGR). Year after year Congress backed away from enforcing the SGR limit, so that enforcing it now would require a 21% payment cut to doctors. (Attempts to appropriate money to fill this hole were called the “doc fix.”)

Nobody has a crystal ball to see the future with certainty, but I see absolutely no reason why Congress would prevent these cuts from being made. Given the determination of business and government to cut services, particularly federally mandated services to seniors, and given the enthusiasm in Congress to make the same cuts, I think it highly probable they will try to make these Medicare cuts, even as they see the wave of 79 million seniors approaching. But before we place our bets, let’s look at some aspects of the Obama plan that might show promise.

Government Intervention: Quality Control? Cost Control? Is there a distinction?

These new payment reforms are being combined with much greater monitoring and oversight of doctors’ and hospitals’ practices, quality of care, and costs. This new monitoring and oversight are described as “value-based purchasing” or “rewarding value over volume.” These methods would standardize patient care, by adopting standard care plans and prescribed drugs that would be developed through studies of comparative effectiveness and cost. The methods would also require doctors and hospitals to report detailed data on their Medicare costs and quality-of-care indicators. “Quality-of-care” data would report both bad indicators like dosage errors, infections, bedsores, falls, etc. Quality-of-care data would also measure adherence to the standard treatment plans and drug choice protocols.

These interventional aspects of the Obama Health Plan could actually improve patient care by promoting “evidence-based medicine” and close monitoring of quality-of-care data. This standardization and quality control could be very welcome to committed clinicians who are discouraged because so much medical research is sponsored by drug companies or who are outraged because of the laxness and lack of uniformity in medical practice, where a doctor can prescribe powerful adult anti-psychotic drugs off-label to an 18 month old child, as reported recently.[54]

But Dr. Marcia Angell, former editor of the New England Journal of Medicine wrote an important and fresh perspective on these improvements in the Obama plan: “Initiatives such as electronic records, case management, preventive care, and comparative effectiveness studies may improve care, but the Congressional Budget Office and most health economists agree that they are unlikely to save much money.”[55]

Marcia Angell’s position is a very different from Obama’s position, which states that these improvements in healthcare will save significant money. Why is this difference important? It is important because by conflating healthcare improvement with cost reduction, Obama is making the Medicare “savings” seem benign, as though the “savings” are an additional payoff of these measures to improve care. It is similar to Obama’s casting Medicare cuts as improvements in efficiency in order to make the cuts seem benign.

In fact, these interventional measures give Health and Human Services and Centers for Medicare & Medicaid Services tremendous centralized power to ratchet back costs to the point of compromising patient care. It gives the government power to standardize patient care plans and drug choices, to reduce payments to doctors for not following the plans, to reduce payments to doctors who spend too much, to reduce payments to hospitals for not meeting productivity standards, to set the payments doctors and hospital get for particular treatments, to push doctors into managed care and then set the payment for coverage per-person per-year, and finally to give an independent commission carte blanche power to reduce provider payment. Given the rampant deficit hysteria in Washington, and demands for corporate tax cuts “to stimulate the economy,” can we be sure these interventions aren’t to ration care to Medicare beneficiaries?

Ultimately, our decision whether to embrace these interventions as a prelude to better healthcare, or fight them as a prelude to rationing, should depend on how much influence we have over policy development. Judging by our recent struggle just to have single-payer mentioned, I would say we have little influence, and therefore these interventions are a threat we need to warn people about.

One can’t ignore the context in which these cuts are being introduced. – Deficit hysteria cultivated in Washington. — Strong agitation by both Democrats and Republicans to cut Social Security, Medicare, and Medicaid. — Demands for corporate tax breaks “to stimulate the economy.” — Economic meltdown followed by persistent, high, long-term unemployment. — Years of huge projected shortfalls in State and County budgets with deep health and welfare cuts. — Years of war projected to secure oil, pipelines for oil and gas, or containment of China or Russia.

These are times when business’s and government’s backs are to the wall. For them, health and social services for elders, people with disabilities, kids, and poor people are not necessary. We are going to have to fight like hell to keep them.

My earlier remarks on health reform still apply:

First single-payer was off the table. Then a public option anyone could use was off the table. Then the Medicare buy-in was off the table. And negotiated drug prices. And cost controls. And .. And…

Most of us are angry, and whipsawed back and forth between pessimism and optimism. The health bill is a gigantic bailout for insurance, drug, hospital, and doctor industries, forcing us onto private insurance, while at the same time forcing down the value of that insurance and making us pay more out-of-pocket, and taking five hundred billion dollars from Medicare over the next ten years. Our optimistic side says maybe 30 of the 50 million uninsured will get insured in four years, though many won’t be able to afford it and will choose to pay extra taxes instead. Many of us have children barely able to keep a roof over their heads, maybe they’ll qualify for Medicaid, though Obama wants to cut Medicaid costs. And what if this awful health bill failed? These thoughts drive us nuts.

It has been a very bitter pill to see how marginalized we are. Deep down, we hoped or expected that once business realized the cost of insurance-based healthcare was unsustainable, our day would come, and our plan of removing insurance companies would be taken seriously. We were wrong.

The truth is we do not have a movement that’s capable of mounting a serious threat to the functioning of the economy or government, through strikes, sit-ins, or occupations. We do not have the General Strikes that forced the government to cough up Social Security. Nor the emerging sit-ins and marches against Jim Crow racism that forced them to cough up Medicare and Medicaid. We cannot expect different results until we have the kind of movement, that can, and will, stop the gears for long enough to inflict serious pain.

Is healthcare more of a human right than food, when a quarter of US children are food-insecure. Is healthcare more of a human right than housing, when families with kids wait for months for shelter beds in San Francisco? What about education?

We need to stop asking for our needs to be on the table. We need to kick the table over.[56]

A Massachusetts local union president called it before the January 19 vote for senator: “I’ve never seen this much anger at the Democrats from union people,” said Jeff Crosby, president of a General Electric factory local near Boston, as he prepared a last-minute leaflet to hand out in the plant. “It’s worse than NAFTA.”

Top union leaders had bargained a compromise slowing down the health care benefits tax President Obama insisted on, but it was not enough to placate union members—and others—infuriated that Obama had broken his campaign promise not to tax benefits.

Crosby said his members were threatening to vote Republican to stop the tax, since 60 Democratic senators and no Republicans had voted for it. In Massachusetts’ special election they chose empty-suit Republican Scott Brown over a Democrat bound to cement the benefits tax in place.

In a Suffolk University poll conducted a week before the election, union-household voters in Massachusetts reported only 45 percent support for the Democratic candidate; union voters nationally backed Obama by 60 percent in 2008.

According to those on a January 14 conference call with AFL-CIO President Rich Trumka, Massachusetts state fed President Bobby Haynes exploded in anger, blaming top union leaders for a terrible health care bill and for losing the Massachusetts election—and thus the Dems’ 60th Senate seat, needed to ensure the health care bill’s passage (and the rest of labor’s agenda, labor law and immigration reform).

Obama took a hands-off approach to the content of the bill as it crept through Congress. He didn’t insist on a public option nor a strong employer mandate to provide insurance. It was hard not to notice that the only issue on which he took a hard stand was taxing benefits.

At his meeting with a dozen labor leaders at the White House January 11, Obama was firm that a tax on benefits was a must-have—despite his campaign promise to the contrary. “We have a lot of video clips,” said Machinists President Thomas Buffenbarger.

Although the benefits tax was not the only issue on Massachusetts voters’ minds (the faltering economy was the No. 1 concern in the Suffolk poll), it was one of the clearest examples of the Obama administration’s tilt away from working class voters, beginning with the bank bailout.

Trumka too had predicted that the health care mess would backfire on Democrats. In a January 11 speech at the National Press Club, he said, “In 1992, workers voted for Democrats who promised action on jobs, who talked about reining in corporate greed, and who promised health care reform. Instead, we got NAFTA, an emboldened Wall Street—and not much more. [In 1994] there was no way to persuade enough working Americans to go to the polls when they couldn’t tell the difference between the two parties.”

NAFTA, which dealt a heavy blow to U.S. manufacturing, was voted up by Congress in 1993 after intense cajoling by President Clinton, garnering the votes of 102 House Democrats. Clinton lost the Democratic majority in Congress the next year—and never got it back.

LET’S MAKE A DEAL

As the likely House-Senate compromise took shape in early January, it appeared certain that if the bill passed, people with good (or just expensive) benefits would face a steep 40 percent tax likely to push them into inferior plans.

So labor leaders reached a deal with White House negotiators January 14 that accepted the tax they’d previously declared unacceptable. The deal announced by Trumka and his counterparts at Change to Win and the National Education Association would have exempted those in union-negotiated plans and state and local employees from the tax until 2018.

It also would have raised the threshold at which the tax kicked in for many other plans: those containing significant numbers of women, older workers, or retirees age 55 and up, or those in high-cost states, the latter affecting more than 38 million workers. Those provisions would have delayed those groups’ hit as well.

Trumka’s goal was to exempt as many people as possible, union and non-union, from ever paying the tax, though only the velocity of health care cost inflation would have proved how successful he was.

“Most of the 31 million insured employees who would be hit by the excise tax are not union members,” Trumka noted before the deal was struck. But in the end unions bought extra time for their members at the cost of making themselves look self-interested. The deal will create awkward moments for union health care activists who’ve spent years trying to build broad coalitions.

STILL OPPOSED

Not all top union leaders backed the compromise plan. Buffenbarger told Labor Notes his members at Boeing, Lockheed Martin, and General Dynamics were already over the $23,000 threshold at which the tax would originally kick in.

“No bill is better than this bill,” Buffenbarger said. “We don’t care what the amount is that they peg it to: because of inflation, whatever number will be gobbled up pretty quickly.”

Firefighters President Harold Schaitberger said his union didn’t ask for the bill’s special, higher threshold for first responders, $26,000 rather than $23,000. The provision was worthless, he said, because most of his members are pooled in larger municipal plans, with no mechanism to segregate them out. “We’re not going to buy into a special deal for us,” Schaitberger said.

The Steelworkers’ Leo Gerard backed the compromise, telling Labor Notes he was thinking about Senator Jim DeMint, “that right-wing nut from one of the Carolinas,” who’s said he wants to make health care Obama’s Waterloo.

“We have to do everything to make sure we get a good bill so we can move forward with the rest of the president’s agenda as quickly as possible,” Gerard said.

Insiders say Trumka sold his compromise by arguing that health care reform had to get done so Congress could tackle long-delayed labor law reform—the Employee Free Choice Act.

Labor’s weakness throughout the health care reform process put a question mark over EFCA anyway, and even the question mark lay in tatters after the Massachusetts election.

Buffenbarger—who backed Hillary Clinton in the primaries—was a pessimist in any case. “We’re not going to get EFCA anyway,” he said. “It’s an election year. No way they’re going to touch it.”

TURN TO THE STATES

One bright spot could emerge from this winter’s health care debacle: union members not pushed into the arms of the tea-partiers could become convinced that “Medicare for All” is the only solution.

“It may mean more people are apt to be engaged on single payer because they’re getting hit themselves,” said Lenny Potash, a retired AFSCME member and co-chair of the Labor Taskforce for Universal Healthcare in Los Angeles.

Activists in California and Vermont have already begun serious work on state single-payer efforts.

The Vermont Workers Center turned out 350 people to legislative hearings January 12 to testify for the state’s single-payer bill. Senator Bernie Sanders was followed by union nurses.

The center, the state’s Jobs with Justice affiliate, began organizing in earnest last year: a rally of 1,000 at the State Capitol on a work day; organized committees in every county; a dozen regional hearings. The result, says co-chair Traven Leyshon, is that “we have changed what’s politically possible. As recently as September the legislature said they couldn’t be bothered with single payer.”

All Democratic candidates for governor next fall say they support single payer (though Leyshon recalls former Governor Howard Dean, who “was always for single payer till the day he became governor”). The Democrats and the Progressive Party together have a veto-proof two-thirds majority in both houses.

A new single-payer bill, just introduced by a Progressive legislator, includes a just transition for insurance company workers and others who would lose their jobs under a single-payer system. The legislation was written so as to survive legal challenges.

SINGLE PAYER IN ONE STATE

California activists will back a single-payer bill starting this month, though Governor Arnold Schwarzenegger, who’s in his last year, is certain to veto it for the third time (similar bills passed in 2006 and 2008). The campaign kicked off January 11 with 1,000 members of the California Health Professional Student Alliance and others rallying in Sacramento.

Michael Lighty of the California Nurses Association explained that winning single payer is a multi-year project: heavy education this year, electing a Democratic governor who won’t veto single payer this fall, passing a new bill, taking the measure to the voters in a referendum. The media campaign alone could cost as much as $20 million.

What about the cost, in a state that’s broke? Cate Engel of the Labor Taskforce for Universal Healthcare said the bill ultimately would save California billions of dollars, by reducing administrative costs and using the state’s mammoth purchasing power to force drug and equipment prices down.

What about California unions that haven’t backed single payer—or ditched the idea before the fight even began, citing “political viability”? Well, said Lighty, “we saw what happened on the national level when they went for public option over single payer because of viability.”

Bill Bryce is the Jobs with Justice organizer in Detroit. He’s shaking his head over the lost opportunities of 2009—the year when Obama rode in on a wave of hope for change and corporations were in disgrace because of the financial fiasco.

“You’re the president, you appear on TV and say, ‘I have a suggestion, let’s tax Wall Street bonuses at 50 percent and defray the cost of health care,’” Bryce said. “If this was not the time to take on the insurance companies and the banks, just when will that time come?”

Health bill holdout Sen. Ben Nelson has been criticized for accepting the “Cornhusker kickback,” permanent federal payment for Medicaid expansion for his state of Nebraska as payment for his yes vote on the Senate health bill. In reaction, “Nelson said Thursday that if he can’t secure a similar deal for every state, he wants states to be freed from paying the cost of Medicaid expansion. That could mean eliminating the provision, finding another way to pay for it or allowing states to opt out.” For millions of the poorest US residents, expansion of Medicaid is the only benefit they get from ObamaCare, and now they’re working to undo even that.

OMAHA, Neb. – Sen. Ben Nelson said Thursday he has asked Democratic leadership to extend to all states the extra Medicaid funding promised to Nebraska in the health care reform bill.

The Democrat wouldn’t say who he has spoken to regarding the so-called “Cornhusker Kickback” but that he would see to it that Nebraska doesn’t get a special deal.

“At the end of the day, whatever Nebraska gets will be available to all states,” Nelson said during a conference call with reporters.

Nelson provided the crucial 60th vote that brought the reform bill to the full Senate after winning concessions to limit the availability of abortions in insurance sold in newly created exchanges. Among other things, he was promised federal funding to cover Nebraska’s entire cost of a Medicaid expansion included in the bill. Other states will have to begin picking up a portion of the added expanse beginning in 2017.

Nelson has said he didn’t ask for special treatment for his state.

Nebraska wasn’t alone in getting Medicaid breaks. Vermont, Louisiana and Massachusetts also got help with their programs.

Nelson said Thursday that if he can’t secure a similar deal for every state, he wants states to be freed from paying the cost of Medicaid expansion. That could mean eliminating the provision, finding another way to pay for it or allowing states to opt out.

“States that are concerned about Nebraska getting something that they’re not getting should rest at ease,” Nelson said. “That’s not going to happen.”

California Gov. Arnold Schwarzenegger on Wednesday urged the state’s lawmakers to vote against the reform measure unless they can negotiate a special deal for more Medicaid money. Thirteen state attorneys general also have threatened to sue if Nebraska’s extra Medicaid funding were not removed from the measure in conference committee.

Nelson said Thursday that he expects all states will get extra Medicaid funding, but he wouldn’t speculate on whether he’d vote against the reform measure if Nebraska was still singled out.

The senator said his top concerns about the bill continue to be making sure federal money won’t pay for abortions and the exclusion of a government-run insurance plan.

The following is a leaflet distributed at the American Public Health Association convention in the fall of 2003, six years ago. It seems pretty relevant today, given the current health reform legislation, with its emphasis on cost reduction for business and government, its incentives to make us pay more for less healthcare while securing sustained profits for insurers, drug companies and hospital chains, and its reliance on cuts to Medicare to fund the whole plan.

HEALTH CARE IN CRISIS. ARE WE AND BUSINESS ON THE SAME PAGE?

Obviously, healthcare is in crisis, but really there are two parallel health care crises.

For us, patients and providers, the health crisis is: 43 million uninsured, “patient driven” insurance that shifts costs to patients through high co-pays and inadequate benefits, a safety-net in tatters, a critical shortage of health workers, a hospital system rife with dangerous mistakes, and the worst health indicators in the industrialized world. It’s clear to us that something must be done.

Business has a completely different health crisis: falling HMO and health insurance profits, rising and uncontrollable health costs, strikes and near-strikes over cuts in employee coverage, millions of ageing baby boomers with expensive diseases on the horizon, an uncertain recovery, huge federal and state budget deficits, and costly open-ended war ahead. From their viewpoint, too, something must be done.

We need high-quality, comprehensive, single-tier, universal, government-financed healthcare. Business needs to lower its operating costs as much as possible. We believe these are conflicting imperatives, which do not point to the same solutions.

Obviously, a huge segment of the corporate world wants to keep health insurance and high-priced drugs as part of the health delivery system because it’s a profitable commodity. That sector is busy planning multi-tier “universal health coverage” where the uninsured get vouchers to buy new stripped-down health plans that could be profitable. This plan was advocated in a recent NY Times Op-Ed piece (11-18-03), a SF Chronicle interview with Kaiser’s CEO (11-16-03), and is a plan proposed by California Blue Shield, which has hired hundreds of workers to handle anticipated new policy holders.

But what about the rest of the corporate world, businesses whose profits are reduced by bloated healthcare profits? Could they help get single payer? Some single-payer advocates say cracks are forming in the wall of corporate resistance. High costs and strikes are making some think twice about single payer. There are even policy-makers who worry that the dominance of the health and drug industries weakens the manufacturing sector, which could compromise national defense in time of major war. Does all this make those businesses our ally?

We think not. For this sector of the economy, workers’ healthcare is a cost of doing business, like maintaining the machinery. Business will try to reduce health costs whether they are paid as direct benefits or as taxes under single payer. They certainly have tried to reduce other tax-supported health programs like Medicare and Medicaid. It should not stretch the imagination to foresee how business could turn the intense centralization of universal single-payer health care to their own advantage, and make it a mechanism for severe rationing of healthcare. For example, the stripped-down “basic coverage” schemes that the insurance industry is presently designing for the uninsured will require standardization and government approval. Once that happens, business will push to have “basic coverage” be the standard for patients under single payer.

For years, business hasn’t given a damn about people not having medical insurance. Since the early 1980s they’ve laid tens of millions of us off, cut millions of current workers and retirees off medical benefits, and made their coverage so expensive that millions cannot afford it even when it is offered. So you’ve got to suspect something is fishy when they start being so concerned about whether we have medical insurance. We saw what happened when they were concerned with seniors not having prescription coverage. They bundled in a plan to dismantle Medicare!

Our healthcare should be neither a commodity nor a cost of doing business. This is a period of tremendous collision of people’s needs and aspirations versus corporate needs and demands. The movement to end this disgraceful situation will involve a tremendous fight. As Quentin Young said, getting good healthcare will be as big a struggle as civil rights. Civil rights, Medicare, and Medicaid were all won by people who worked, their families, and people who would have worked if they could. Their actions on the job, in their schools, organizations, churches, in the streets, and in the military challenged the US’s ability to govern and made the government produce the “Great Society” programs. Although many of these gains have been erased in the intervening forty years, millions of lives were improved and the struggle remains as an inspiration and example of what is needed for deep reform of society.

We deserve nothing less than high-quality, comprehensive, single-tier, universal, government-financed healthcare. We have to be clear on what it will take to get it and who our allies are.